Energy drinks and granola bars are normal goods. When the price of energy drinks decreases, the income effect causes
a. the consumer to feel richer, so the consumer buys more granola bars.
b. the consumer to feel richer, so the consumer buys fewer granola bars.
c. granola bars to be relatively more expensive, so the consumer buys more granola bars.
d. granola bars to be relatively less expensive, so the consumer buys fewer granola bars.
a
You might also like to view...
Refer to the scenario above. What will be the capital stock in the economy in the current year, if the capital stock in the last year was $1,000?
A) $1,400 B) $1,200 C) $1,600 D) $1,800
Which of the following prevented the Fed from reducing long-term real interest rates during the Financial Crisis of 2007-2009?
A) an increase in expected inflation B) an increase in the risk premium C) the collapse in the housing market D) the failure of the federal funds rate to respond to monetary policy
The CPI was 238 in one year and 244 the following year. How much did prices rise between these two years?
A) 2.46 percent B) 5.50 percent C) 2.52 percent D) 0.03 percent
Dahlia can earn $60,000 a year working at a relatively safe job, or $65,000 a year working at a riskier job
The probability of death from working at the relatively safe job is 1/5,000, and the probability of death from working at the riskier job is 1/1,000. Using the compensating differential approach and the above information, what is the value of Dahlia's life? A) $2 million B) $2.5 million C) $6.25 million D) $25 million